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DALLAS-A local condo converter has scored the win for a 153-unit complex in West Oak Lawn after getting caught in a bidding war in a second marketing round. The face-off brought $35,000 more than the $6.5-million ask, but the plan is to strip the complex down to its bones and invest millions more for the rebuild.
San Carlos Associates LP, led by Steve Baxter, is huddling over the rebuild plan for the 12-building San Carlos Apartments at 5010 Maple Ave., a 5.3-acre tract with 381 feet of frontage. The asset's location stirred interest from local, regional and national firms because it's situated right across the street from Parkland Memorial Hospital's proposed 75,000-sf ambulatory surgery center and 670,000-sf neo-natal facility, which is awaiting funding. "I've only had three to five deals in my career that generated this much outside interest during escrow," says Peter Hartnett, associate partner for Hendricks & Partners in Dallas.
Hartnett says the interest wasn't there when he listed the property 18 months ago, originally bringing it to market as a land play. He says there were multiple offers from developers, but the seller wanted a 30-day look and 45-day close so he went with an offer from a straight-up apartment buyer. When it fell out, a multifamily developer placed a contract, but retreated on the deal because he couldn't get the density numbers to work, Hartnett tells GlobeSt.com.
A second marketing presented buying opportunities for an as-is hold, land play or condo conversion. And that's when the bidding war erupted. "Sometimes, time is on your side," Hartnett says, adding the local seller, Sherman Oaks Barclay Square Apartments LP, got double what it paid for the property about five years ago.
San Carlos Apartments was fully occupied when the deed changed hands so the conversion process is going to take some time. Sam Lewis, senior adviser for Hendricks & Partners, says the buyer plans to gut the buildings, possibly two at a time, to renovate mechanical systems and build from the inside out so that the condos will be "new." "It takes awhile to do it this way," he says, "but the end result is the condo buyer gets a quality product and not a retool."
Lewis says Baxter's plan is to produce affordable condos rather than push into the $300,000 and $400,000 bracket that's so prevalent in Oak Lawn. "They're thinking this is going to be an affordable alternative in that market," he says. "This has worked for them in the past and this will be another win for them." He expects the conversion will get under way in a few months. "The planning began on the day we closed," he says.
San Carlos abuts a 224-unit mid-rise by Carlton Residential, backs up to FirstWorthing Corp.'s mixed-use development and neighbors Alliance Residential-Crow Holdings' 8.3-acre mixed-use plan for the old Parkland Hospital site. And, it's within walking distance of Children's, Parkland Memorial, Zale Lipsky and St. Paul hospitals.
Built in 1963, San Carlos Apartments has two efficiency units, five three-bedroom apartments, 24 one-bedroom and the balance are two-bedroom floor plans. Units range from 300 sf to 1,152 sf. Rents go from $350 per month to $950.
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